BBD’s Sheridan: Rod Sheridan, who retired last year after 20 years at Bombardier, has been named vice chairman of Nordic Aviation Capital, the world’s largest lessor of turboprop aircraft. Nordic owns more ATR turboprops and has more on backlog than any other company.
Sheridan was vice president of sales and asset management at Bombardier. His retirement last year was considered by many in the industry to be a major loss to BBD’s ailing aerospace division, coming as it did on the heels of major personnel changes as BBD restructured the unit. Turmoil continued with the departure last month of Ray Jones, the head of sales, within weeks of Sheridan’s departure.
Sheridan was responsible for Bombardier’s commercial entry into Russia. He was key to opening the CSeries market to lessors.
United and 777-300ERs: United Airlines is set to place an order for 10+10 Boeing 777-300ERs, reports Bloomberg. An announcement could come as early as this week. These would be UAL’s first -300ERs. Legacy United was launch customer of the 777-200 and legacy Continental Airlines ordered the -200ER. Only American Airlines in the US operates the -300ER and this became reality only in recent years.
The UAL order will be an important step in Boeing bridging the production gap for its 777 line until entry-into-service of the 777X in 2020. But it will come at a cost. Two market sources familiar with the deal say United will get the airplanes for around $130m, a sharp discount to the normal discounted price of around $150m.
$130m or $150m, is this with or without engines?
With Engines. Planes are a lot cheaper to produce with or without engines than you would think. Tooling on the 777 was paid for after the 1st 100 or planes left the line…..from then on it’s dirt cheap.
In reality, it cost Boeing (with Engines) around $75,000,000 plus/or minus a few million……………..so………….even with 777s at fire sale prices……………some form of profit is better than no profit. Airbus loses money every plane they sell………..even at near list……….because they have prodcution infrastructure out of control.
CF6s/GE 90 versions used in Municipal power-plant applications(think electricity for your home); they only run a few million a piece Brand New………..if you buy in volume
“Airbus loses money every plane they sell………..even at near list”
They must be doing some kind of wizardry to generate money out of thin air to show profits in their financial statements.
Nothing unusual about cooking the books!
I do suspect Airbus does better than that statement though.
On the other hand who doesn’t like free lunch money? (grin)
Admittedly as of late Boeing make Airbus look like a piker porker at the trough.
Airbus/Subcontractors has about 8 times the workforce/overhead and yet produces equal in volume to Boeing…does on thin(yet very productive) work-forces. Airbus. Airbus gets a cash Government subsidy; that is then fronted as “profit” for every completed aircraft. The banks that loan the purchase of Airbus products are MOSTLY Government Sponsored/State Owned owned………so cooking the books is fairly easy………..make the tax payers pay for incurred losses. Volkswagen Group works the same scheme………accept the VW Group does not like to talk about the cash subsidy-infusions that are then fronted as “profit” year after year.
Why do you think Airbus is setting-up shop in the USA? It’s hemorrhaging in the EU/UK ……cost way too much to produce anything in the EU/UK. With EU/Uk economy in the “ships” and Euro not being a stable currency….it’s the reason many EU/UK companies are fleeing to the USA.
“.. the cash subsidy-infusions that are then fronted as “profit” year after year.”
You are aware that you are describing the Model Boeing is working by ;-?
( Except they seem to just burn those waived taxes as they additionally have to borrow money from the future to show profit.
.. could we return to a sensible discussion please?
I seem to remember Airbus having a cost advantage in FAL assembly.
As Mark Twain once said, “It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt.”
Don’t forget, Boeing was giving away 787s for 50-$60,000,000 ten years ago for the 1st punters at the line……..to pay down R&D/ tooling/Payroll,etc. then . Airbus was giving away A380s for $125,000,000 +/- a few million to the 1st punters.
RyanAir/Southwest get brand new 737s for about 1/3 list price……………. volume and cash are king. You bring cash-deposit money in-hand and a plane maker will make a deal.
But there are strings attached; if you are a problematic customer that causes headaches with delivery slot dates not set in stone,etc; you ain’t gonna get a deal.
And the tooling does wear out eventually and needs to be replaced, as well. I have no idea on when that happens for commercial aerospace tooling, although I expect some of it will be sooner and others later.
Boeing uses reconditioned/well maintained 50+ year 707 old tooling for its twin engine d little brother>>>>737. Tooling for planes last a lot longer than say(dies)for stamping out thousands of panels per-day for a car-truck line. Planes are relatively low-volume items in relation to tooling life span. Boeing/Subcontractors still uses original Jigs/Tooling when the 747,767,777 Programs began.
Our market intelligence tells us it costs Boeing ~$100m to produce the airplane out the door.
Now that sounds valid (not that Scott need me to tell him that!)
less………Engines ,Avionics,Hydraulics, landing gear systems are a lot cheaper if hedged ahead of time. Boeing bought/hedged parts for the C17 Program even before the program was winding down.
You are mixing advantages from buying in larger batches with End of Line provisioning
for discontinued parts either for ongoing production
or repair. With some parts it is not a question of more money to purchase but _no_ purchase at all.
( I even get notice from my upstream supplier when
a manufacturer discontinues parts production for stuff that I have an order history for. )
But a35J! I could have sworn I read somewhere that this plane would be dislocating all but 90% of 77W routes as the latter is just too old/heavy/inefficient.
…if you can get it soon enough.
It seems UA might cancel 10 787-9s as part of the deal. Would be a bit of a cold water thing.
And where did you hear this? Why can’t they just buy it because they need the lift between the time the A35J arrives. Any credible sources of information regarding UA cancelling the 787-9’s for the 77W order would be greatly appreciated. Thanks.
Thanks. To me it seems like an investment. While similar to the Delta RFP where BA lost due to not having the availability DL wanted, UA in this case wants to accelerate the retirement of the aircraft the 77W’s will be replacing AND it serves to note that the aroma of a 779 could be in distant future. I’d hardly call it “pouring cold water” though.
It’s an interesting display of how different the US aviation market is from Europe or Asia – that an aircraft that is the mainstay of Asian or European airlines is a no show with American airlines.
Always amazed me to but part of it was investment in the 747-400s and having no money at the time and then all this new stuff coming out and its, sheese, lets get the latest thing not the older stuff.
On the other hand if the price is right it works out the same as the A330 at lower prices vs the 787.
Indeed. UA’s 777 fleet is all of the older -200 and -200ER varieties, none of the more modern -200LR or -300ER models. Even Air Canada, which is far smaller and until recently was mostly Airbus, operates 6 -200LRs and 17 -300ERs. Outside the US, the -300ER is really the mainstay of overseas operations.
Plus Air Canada in some 77W flights to Asia have 468 seats, while a 2 class cabin has 350 seats. Plenty to replace 747 one for one
I remember United once announced they ordered A350-900s to replace their 747-400 fleet. And many believed it!
Like capacity isn’t that important in network/fleet planning.. :/ Even the 777-300ER is on the small side to replace daily Pacific 744 flights in the booming Asian market.
Historically JAL, ANA, NWA and UA were dominant network carriers on the Pacific & watching each other closely. Things have changed, but if one of these finally orders the A380 the others react.
“Like capacity isn’t that important in network/fleet planning.. :/ Even the 777-300ER is on the small side to replace daily Pacific 744 flights in the booming Asian market.”
But the UA 744’s have 374 seats. Well within the seating range of the 77W. I’m not 100% that UA will use them to replace the 744’s but at the very least it expedites the lift the that the A35J was supposed to do.
“But the UA 744’s have 374 seats.
Well within the seating range of the 77W. ”
Sure. But you would have to go with a comparable ( to the 744 ) seating density in a replacement move.
You can’t just swap over to a “live stock to meat factory” density and point out that that would be a cheaper setup.
( Then you could have that even cheaper if you do the same to the 744 )
Actually the same error the 777 better/cheaper than A380 proponents make.
Exactly. Can’t compare manufacturers’ advertised (and fictional!) seat counts to airlines’ actual configurations.
BA has 299 seats in their four-class 773, compared with 347 on their four-class 744. The 744’s floor area is substantially larger than that of the 773, there is simply no way around that.
Good explanation. Thanks
United 777-200ER’s have 258 seats. It’s not about what the OEM thinks should be the seatcounts. It is what airline predefined fleet seat and cabin specs do in the bigger airframe.
A 747-400 is bigger then a 777-300ER, so United could potentially be surrendering marketshare to the competition by parking 747s. In growing Asia. Often we take a technical approach and focus on fuel efficiency. Slots, overfly rights, network waves, raw seatcapacity, marketshare, tickets sold and yield are often more important for fleetselection.
but I bet all those old 744s have old “thickline” seats at 32″ pitch in cloach and the new 77Ws will use new slimline seating, 10 across @ 30″ pitch and other similar optimizations in other seating classes should help make up the capacity difference
Better put those slim 30 inch seats in the 744 too to prevent apples to oranges. And include etops restrictions and tonnes cargo payload on e.g hkg-lax.
EK / Clark is at it again..
Seems like Emirates could pay for the development(several billion) of the A380neo, and then collect royalties from anyone who purchased it. Or be a risk sharing partner with Airbus.
When the first phase of the expansion of the Al Maktoum International at Dubai World Central is completed in 2023, Clark and EK will be getting 100 contact stands for Code F Aircraft (A380) with 3 airbridges each. That’s 75 more contact stands than what’s available today at DXB (i.e. 5 A380 stands at Concourse B and 20 A380 stands at Concourse A).
100 A380 capable contact stands is equivalent to a fleet of at least 300 A380s (i.e. only about one third of the fleet will be in Dubai at any one time) In the second phase they’ll be adding another 100 contact stands for Code F Aircraft (A380). That would seem to indicate that Emirates is planning to eventually have a fleet consisting of at least 500 A380-sized aircraft (i.e. post 2030).
43 billion in new A380s, a 32 billion airport expansion, then a few billion for a neo seems like a trivial expense in the grand scheme of things.
I’d guess that 43 billion will get you more that 100 A380s. 🙂
One or two billion for an A380-800neo is, of course, nothing in the grand scheme of things. In fact, an EK assured order for 100 A388neo’s will pay for the damn thing. Anyone disputing that must surely be smoking something. 😉
I guess oil at $50 or less means there are things like a mega airport expansion that cant be afforded. Yes Dubai doesnt have much oil, but that what is essentially paying for all this shiney new infrastructure.
Of course, people can choose to stick their heads in the sand and say they’re not to going acknowledge that there might be other sources of income than oil that’s paying for a slew of massive infrastructure developments in the emirate.
Saudis already have a Stake in EADS/Airbus, and Mercedes Benz(which is a major subcontractor of Airbus products ). They pay “employee/owner” prices for all their Airbus products. A380 is a fat pig……………there is no demand (year-round) for a plane fitted with 450- 500 seats and gulps a lot of fuel…not to mention the A380 are maintenance nightmares….extremely expensive to keep airworthy.
Large Twins are the Present and Future…only reason the 747 exists………..it’s a proven Chameleon with its Freight abilities and opening front and modest/reasonable fuel burn rates/ranges carrying serious loads.
Airbus lied about the A380 when it launched and sold it to mainly State Owned/State Sponsored Carriers………….it’s why no new orders have come forward. GE sure as hell ain’t gonna let them mount GE90s…………after all Boeing/GE shared the R&D on it. Even if the GE90 was available, all the inherent flaws of the A380 still exist. P&W-GE hybrid is the safer bet than the Trent until it (the A380 Program) gets axed.
Tax payers of EU/UK not too keen about paying for a product that nobody wants…………repeat of the A340 variants
Mr McNamara , even the most strident A380 basher seldom presents so many factual errors that you’ve managed to cook up in the post above. Do you really expect to ever be taken seriously?
“Saudis already have a Stake in EADS/Airbus, and Mercedes Benz(which is a major subcontractor of Airbus products ).”
For your information; the United Arab Emirates is not part of Saudi Arabia. BTW, Dubai is the second largest emirate by territorial size after the capital, Abu Dhabi, and the biggest emirate by population size
“They pay “employee/owner” prices for all their Airbus products.”
Do “they” really?
Perhaps you can present a source verifying your claim that the airline in question — presumably Emirates and not Saudia — are paying “employee/owner prices for all their Airbus Products”.
“there is no demand (year-round) for a plane fitted with 450- 500 seats and gulps a lot of fuel”
If you’re talking about the domestic air travel market in the US, you’re probably right. If, on the other hand, you should ever realise that there’s a world outside the US domestic market, then you might figure out that already, the A380 fleet currently operates on 94 routes to 44 global destinations.
“not to mention the A380 are maintenance nightmares….extremely expensive to keep airworthy.”
Now, it’s true that the A380 has higher maintenance costs than smaller aircraft. These expenses are compensated for, though, by the A380’s ability to carry more passengers than any other aircraft. Is that so hard to grasp?
“Airbus lied about the A380 when it launched”
What did Airbus supposedly lie about?
“and sold it to mainly State Owned/State Sponsored Carriers”
As a side note it’s interesting to look at Chapter 11 of the US Bankruptcy Code, which is definitely a form of state aid and has kept the the US airline industry pretty bloated. It has distorted competition on intercontinental flights into and out of the US by propping up struggling US carriers. For example, US Airlines have not been forced to serve unsecured debt and have been able to get out of long-term contracts with lessors and unions. In contrast, European bankruptcy laws generally do not allow the orderly and protected restructuring that US airlines have enjoyed under Chapter 11.
“GE sure as hell ain’t gonna let them mount GE90s…………after all Boeing/GE shared the R&D on it. Even if the GE90 was available, all the inherent flaws of the A380 still exist.”
The dry weight of a GE90-115B engine is 19315 lb.
The dry weight of an Engine Alliance GP-7200 (A380-) engine is 14810 lb.
That’s a difference of 4505 lb per engine; or a difference in weight of 18020 pounds for 4 engines. So, Airbus sure as hell ain’t gonna let GE mount four GE90s on the A380.
If you meant the 105,000 lb of thrust GE9X engine, then I’m sorry to inform you that it will also be way to heavy for an A380neo. GE would have to offer a scaled down and significantly lighter version (i.e. smaller fan, compressors and core, etc.). That’s — at least — a one billion dollar undertaking.
One reason for the longevity of the A380 and an inevitable neo, is the investment in airport infrastructure, like LAX, JFK, Frankfort. Plus, these airports are parking space limited, which is always a case for double stacked aircraft like the A380 or 748.
Seems like the A380 burns enough gas to pay off a new engine.
Maybe 50 million gal/yr, x 100 aircraft x 10 yr
50 billion gal
So a 5% step change in engine efficiency might be worth 2.5 billion gal x $4 is 10 billion recouped on whatever it takes to develop a new engine and finance it.
This is a pyrrhic victory for Boeing. They give those 777’s away at rock bottom prices and get cancelled 787’s as a bonus. But at least the 777 line gets some badly needed work.
Das Hemd ist näher als die Hose 😉
at the moment Boeing has better use for 777 Classic demand than for 787 deliveries. Brings some leeway either via reduced penalties for less late deliveries and/or some power in purchase bargaining.
Seen any of them go from delivery to a parking lot on the 787 side. I doubt that those 787-9 moves will actually go away. AF – KLM left some open slots that were moved to UA for a deal. Production line remains constant and the suppliers continue to produce. The bigger issue here is that now DL has the least capacity at a cost per seat point of all going to Asia now. UA has retired 747s, cut their fleetwide cost and given themselves an opportunity to add those frames at an excellent price point. Just as DL did with taking the EK slots off Airbus hands. As in the DL case, being at the right place at the right time resulted in a major low purchase win. Respect these business people for the manner in which they approach fleet management strategies. None of these deals are seen as real cancelations because the focus is on filling needs, so getting a 777-300ER now and removing a 747-400 is better than using a 787-9 to replace a 767-300ER. That was the decision at this moment. Does not mean the 767-300 will not need replacement, they can be moved to the right. DL wanted frequency over the immediate removal of the 747s so they went with the mid range replacements. Long term they will need capacity as well, and that purchase may be an Airbus or Boeing acquisition. The winner, will be the supply chain who end up being the same folks in many cases.
What was the profit margin on the cancelled 787s? Maybe it’s a wash. Probably evened out Boeing’s production and United’s fleet needs, so slightly a win-win.
The Transition-Idle time is lessened to when the revamped 777x is brought out. Subaru/Kawasaki,etc. Subcontractors have work and won’t be idled as long a period………say from the 747-400 to the 747-8 Transition idle time.
Continental airlines ultimately became a Boeing only company. For this reason, this purchase is not strange. Smisek was also the CEO of Continental and Gordon Bethune, before him, worked for Boeing.
Interesting how AA and new United are such late comers for the 777-300ER now that other airlines are planning their replacement.
I think Delta will triumph. The 2-4-2 configuration for the Neo’s will be the most comfortable cabin will be the most comfortable.
I think United is going to cancel (err defer) the A350-1000s.
Otherwise the possible deal for up to 20 777-300s makes not sense (which loose value rapidly as they are superseded by the 777-x and why would you have two aircraft doing the same mission? Adds to logistics complexity and you aren’t going to dump them in a few years.
they lived with the 747-400s through high fuel prices and now suddenly the can’t? I don’t buy it.
I also suspect in this deal is the future purchase of 777-9x for sure and maybe 8x as well.
It will be interesting to see how this evolves going ahead